Budget 2021 Highlights for Corporate

  1. Investment in Key Sectors RM1 billion special incentive package for high value-added technology, with a focus on supporting R&D investment in aerospace and electronics.
  2. RM500 million High Technology Fund will be provided by Bank Negara Malaysia (BNM) to support high technology and innovative companies.
  3. Incentives for businesses relocating into Malaysia
  • Application for the incentive of special tax rates for manufacturing companies relocating businesses to Malaysia be extended for another 1 year until 31 December 2022;
  • the scope of tax incentives will also be extended to companies in selected services sector which have significant multiplier effect by providing an income tax rate of 0 to 10% for a period of 10 years.

4. Initiatives in Making Malaysia A Destination For High-Value Service Activities

i. Relaxation of tax incentive conditions for Principal Hub,
the incentive will be extended until 31 December 2022;

ii. New tax incentive for the establishment of Global Trading Centre at a concessionary rate of 10% for a period of 5 years and renewable for a period of another 5 years;

iii. Limit on sales value for value-added and additional activities carried out in the Free Industrial Zone and Licensed Manufacturing Warehouse be increased from 10% to 40% of the total annual sales value; and

iv. Special income tax treatment at a flat rate of 15% for a period of 5 years to non-resident individuals holding key positions for strategic new investment by companies relocating their operations to Malaysia under the Pelan Jana Semula Ekonomi Negara (PENJANA) incentive package.

5. Existing Tax Incentives extended until 2022 include tax incentives for MRO activities for aerospace, building and repair of ships, Bionexus status and economic corridor developments.

6. A National Development Scheme (NDS) valued at 1.4 billion ringgit by Bank Pembangunan Malaysia will be introduced to support the implementation and development of domestic supply chain and increase the production of local products such as medical devices.

7. Extension of Funds and Schemes
Maritime Development and Logistics Scheme; Sustainable Development Financing Scheme; Tourism Infrastructure Scheme; and Public Transport Fund
will be extended until 31 December 2023 with a fund size of RM 3.7 billion.
( RM500 million ringgit from these schemes will be designated for Bumiputera entrepreneurs.)

8. Targeted Assistance and Rehabilitation facility worth RM2 billion under Bank Negara Malaysia will be introduced through loans from banking institutions for affected SMEs.

9. Initiatives for Locally Manufactured Products
i. RM25 million for the Micro Franchise Development, Affordable Franchise programmes and Buy Made in Malaysia programme;

ii. RM150 million for training programmes, sales assistance and digital equipment for 100,000 local entrepreneurs to encourage adoption of e-commerce under the e-Commerce SME and Micro SME Campaign;

iii. RM150 million to implement Shop Malaysia Online initiative together with the e-commerce platform to encourage online spending which will benefit 500,000 local sellers including the halal products and handicrafts entrepreneurs; and

iv. RM35 million to promote Malaysian-made products and services under the Trade and Investment Mission.

10. Tax Inventive for manufacturers of pharmaceutical products including vaccines to invest in Malaysia, preferential tax rate of 0 to 10% for 10 years.

11. Empowering the Agriculture Sector

i. RM30 million allocated in Community Farming Programme and expanded to the semi-urban and rural communities. This programme provides equipment such as fertigation kits and crop media up to RM500 per individual or RM50,000 per community, is expected to benefit 60,000 participants;

ii. RM50 million allocated to implement Organic Agriculture Project to benefit 1,000 communities;

iii. RM10 million in matching grants allocated in e-Satellite Farm Programme, with up to RM30,000 to the Pertubuhan Peladang Kawasan (PPK) for the purpose of purchasing agriculture equipment based on the Internet of Things including drones. The programme is expected to benefit more than 300 PPKs with a membership of nearly 1 million farmers and planters;

iv. For fisherman: Financing under the Vessel Modernization and Capture Mechanization Programme of up to RM 5 million (at a rate of 3.5%) for a period of 10 years to fishermen in zones A and B to upgrade equipment, nets and boats (RM150 million provided by Agrobank);

v. For agricultural entrepreneurs: Funding under the Agrofood Value Chain Modernization Programme of up to RM1 million (at a rate of 3.5%) for a period of 10 years for agricultural entrepreneurs to procure equipment and technology based on IR4.0. (RM60 million provided by Agrobank);

vi. For micro-entrepreneurs: RM10 million through matching grants is allocated in Aquaculture Development Programme,
up to RM20,000 for micro entrepreneurs to purchase equipment to develop high-value aquaculture livestock such as lobster and grouper; and

vii. The implementation of impactful and high-value farming projects with an RM100 million through collaboration with State governments such as pineapple farming in Johor and freshwater prawns in Negeri Sembilan.

12. Commodity Sector

  • RM20 million allocated to extend Malaysian Sustainable Palm Oil Certification or MSPO to boost growth and enhance the competitiveness of palm oil industry.
  • RM30 million matching grants for commodity sector industry’s investment in mechanisation and automation;
  • RM16 million allocated in incentives for latex production, focused in Pahang, Terengganu and Kelantan;
  • A furniture industrial park to be opened in Pagoh,
    to further boost the timber industry and provide employment opportunities.

13. Tourism Industry

  • 6 months HRDF levies exemption will be given (effective from 1 January 2021)
    This exemption will cover the tourism sector and companies affected by the COVID-19 crisis.
  • Training and placements for 8,000 employees of airline companies in Malaysia with an allocation of RM 50 million to be provided by Government.
  • RM35 million allocated to the Malaysia Healthcare Travel Council to enhance the competitiveness of the local health tourism industry.
  • Income tax exemption for the export of private healthcare services extended until the year of assessment 2022.
  • RM1,000 Grant Khas Prihatin be given to traders, hawkers, taxi drivers, e-hailing, rental cars and tour drivers in Sabah.

14. RM1 billion in Industrial Digitalization Transformation Scheme to be provided by BPMB, to boost digitalization activities. These funds will be extended until 31 December 2023.

15. For automation and modernization, RM150 million additional funds will be provided under the SME Digitalization Grant Scheme and the Automation Grant. The Grants’ eligibility conditions are relaxed for micro SMEs and start-ups that have been operating for at least six months.

16. Financing for Business

i. Micro Credit Financing

  • Through PUNB, RM230 million allocated as financing to SMEs for working capital, upgrading of automation systems and equipment and expenditure related to the implementation of COVID-19 SOP compliance.
  • For Bumiputera micro and small businesses,
    RM300 million in Lestari Bumi financing facility scheme provided by SME Bank.
  • National Supply Chain Finance Platform (“Jana Niaga”) introduced to assist the financial position of SMEs that supply to the Government or GLCs.
    – This platform will be led by EXIM Bank with the involvement of several financial institutions. RM300 million will be provided by EXIM Bank to drive Jana Niaga.
    – Implementing GLCs are Petronas and Telekom Malaysia and will be extended to other GLCs, Ministries and Government agencies in the future.
  • RM50 million matching grant allocated in Peer-to-peer financing (P2P) under Securities Commission Malaysia (SC) for SMEs financing.
  • Almost RM1.2 billion micro credit financing will be provided through TEKUN, PUNB, Agrobank, BSN and other financial institutions.
    – This includes RM110 million to Micro Enterprises Facility under BNM to encourage entrepreneurship among gig workers and self-employed and to support iTEKAD program.

ii. Loan Guarantees Financing

  • RM10 billion increase in loan guarantees given under Syarikat Jaminan Pembiayaan Perniagaan, with RM2 billion reserved for Bumiputera entrepreneurs.
  • For corporate companies involved in highly high skilled industries such as oil & gas and aerospace, RM3 billion in guarantee allocated under the Dana Jamin Prihatin Guarantee Scheme and will be extended until 2021 with improved terms and conditions.
  • Others
    Consumer Credit Act will be formulated
    – To encourage standardised credit lending activities and increase consumer protection.
    – This formulation will be led by Bank Negara Malaysia and Securities Commission.

iii. Alternative Financing

  • For Equity Crowd Funding (ECF)
    – 50% income tax exemption on the investment amount or limited to RM50,000 will be given.
    – An allocation of RM30 million in matching grant will also be invested on ECF platforms under the supervision of the SC.

17. For construction contractors

  • RM2.5 billion allocated for contractors in Class G1 to G4
    – including additional RM200 million for maintenance projects for Federal Roads and RM50 million for PPR houses.
    – Government will also extend flexibilities accorded on procurement procedures until December 2021 to expedite the implementation of developmental projects.
  • RM50 million allocated in financing access for construction contractors through MARA, under the Skim Pembiayaan Kontrak Ekspres, SPiKE will be offered to Bumiputera contractors who deal with the Government to facilitate cash flow in implementing projects.

18. RM20 million allocated to the Malaysian Global Innovation and Creativity Center or MaGIC and selected agencies in social enterprise development program.

– Social enterprises with Government Impact e-Procurement Program Certificate from MaGIC and other selected agencies can join in the pilot project for the e-Procurement registration to become suppliers to the Government.
– With this initiative, social enterprises can supply goods and services in total up to RM20 million per year.

19. RM2 billion allocated to extend the Green Technology Financing Scheme 3.0 (GTFS3.0) for two years up to 2022.

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